European equity markets fluctuated strongly in today’s session and ended the week in the negative territory, with the exception of the London benchmark index which edged higher towards 6,570. However, the CAC, DAX and IBEX remained under pressure after retreating sharply between 1.25% and 1.95%, following the recent tepid European economic data which verified a slowdown of the European economic developments.
On the macroeconomic front, Germany’s industrial production rose modestly by 1.4% in September versus analysts’ estimates of a 2.0% rise, while German exports surged 5.5% in September beating expectations of a 2.7% rise and imports rose 5.4% beating estimates of 1.1%. Furthermore, UK trade deficit widened to £9.82 bln in September from a deficit of $8.95 bln in August.
On the other side of the Atlantic, the US economy added 214,000 jobs in October against expectations of 235,000. However, we received some fairly optimistic employment news as the US unemployment rate declined further to 5.8% m/m in October compared to 5.9% in September and 7.0% in November 2013. The Head of New York Fed, William Dudley, reported today that a US interest rate increase would be “welcome, signalling improving US economic conditions. “If all goes according to our forecast and the U.S. economy continues to make progress towards the Fed's dual mandate goals ... the Federal Reserve will likely begin to raise its federal funds rate target off the zero lower bound sometime next year”.
Base and precious metal prices recovered and climbed higher, as risk appetite increased. Gold gained over 1.8% heading towards $1,180, while silver climbed higher to retest $15.70. Copper rose towards $6,700 and lead, tin and zinc remained in positive territory.
It has been a fairly volatile week with mixed economic data which caused high volatility across equity and commodity markets. The ECB and BoE held interest rates unchanged, while the US Fed signalled again a possible interest rate hike “sometime next year”.